Spending by wage-earner households fell 6 percent in July in real terms from a year earlier for the largest monthly contraction in nine years and reversing the previous month’s 0.4 percent increase, the government said Friday.

Average monthly household spending came to 326,772 yen, the Public Management, Home Affairs, Posts and Telecommunications Ministry said in a preliminary report.

Their average monthly income, including summer bonuses, dropped 1.1 percent in real terms to 575,142 yen, falling for the 16th consecutive month. Disposable income declined a real 1.7 percent to 479,433 yen.

Personal spending accounts for about 60 percent of Japan’s gross domestic product, and wage-earning households’ outlays make up 60 percent of all household spending.

The ministry cited substantial declines in spending on housing improvements and ceremonial occasions, such as marriages and funerals, as the two largest factors for the decline in overall spending.

“Those two one-time factors combined to contribute to nearly a half of the 6 percent fall, which appears to be a fairly big margin,” a ministry spokesman said. The margin of decline is the largest since a 6.9 percent fall recorded in March 1994.

Lower spending on housing renovation led to a real 16.5 percent decrease from a year earlier to 20,762 yen in overall housing-related spending.

Spending on transportation and telecommunications dropped 6.8 percent in real terms to 45,886 yen, and outlays on education fell by the same margin, to 14,101 yen.

Spending on food, including alcoholic beverages and fruit, shrank 1.4 percent to 71,770 yen as the unseasonably low temperatures in July quashed spending on beer and other cold drinks, according to the ministry.

Spending decreased by 17.8 percent on beer, by 13.4 percent on “happoshu” low-malt beer, and by 13.6 percent on tea-type soft drinks, it said.

Among other items, spending on package tours, which are included in the education and entertainment category, fell 26.2 percent in nominal terms, compared with a 0.4 percent decline the previous month.

Overall spending on education and entertainment items edged down 0.2 percent in real terms to 36,298 yen.

Health and medical care was among the few categories where spending increased, rising 6.3 percent to 12,471 yen in

Prices down again

The key gauge of consumer prices in Tokyo edged down 0.3 percent in August from a year earlier for a record 47 consecutive months of decline, the government said in a preliminary report Friday.

The consumer price index for Tokyo’s 23 wards, excluding prices of perishable foods, registered 97.7 against the base of 100 set in 2000, the Public Management, Home Affairs, Posts and Telecommunications Ministry said. The index was up 0.3 percent from July, however.

Consumer prices in Tokyo are a leading indicator of prices across Japan.

The margin of decline from year-before levels for the core CPI, which marked successive declines of 0.4 percent for four straight months through July, is the smallest since November 1999, when the index fell an identical 0.3 percent.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.